If the numbers are anything to go by, Fred Marlow doesn't
look as if he should be a major concern to other realtors.
Last year Marlow's Hillsboro-based company, RealPro Home
Marketing Services, sold $50 million worth of houses in
the metro area--a little more than 1 percent of the sales
closed. But it's the way Marlow does business that threatens
the clubby and lucrative world of real-estate brokerage.
"Real-estate companies have been able to charge what
they do because they had exclusive access to the buyers,"
Marlow says, "and that's changing."
Taking his cue from Wall Street, Marlow set up what
is essentially a discount brokerage business aimed at
allowing consumers to bypass costly commissions when
selling property. He's done it by handing homeowners
the keys to the real-estate industry's most jealously
guarded asset: the Realtors Multiple Listing Service.
The RMLS is a searchable database that allows licensed
realtors to sort and list thousands of homes by any
of 70 different search criteria. Looking for a four-bedroom
ranch with a fireplace and deck for about $170,000 within
10 miles of downtown? With a few keystrokes, the RMLS
will sort through a list of more than 10,000 properties
currently on the market and spit out a list of candidates.
Marlow estimates that 85 or 90 percent of home sales
originate when buyers' brokers find houses on the RMLS.
Before RealPro opened in 1997, local home sellers could
get their homes listed on the RMLS only by hiring a
full-service brokerage company, such as Hasson, Windermere
or Coldwell Banker.
Such full-service shops offer two things: marketing
expertise and access to the RMLS. In exchange, they
typically charge sellers 6 percent of the sales price
in commission. When a sale is closed, 55 percent of
the commission typically goes to the seller's broker,
the balance to the buyer's broker--with the seller paying
both sides.
Marlow thinks many sellers, particularly those who
are financially sophisticated or have sold homes before,
want only the RMLS access. So, rather than charge customers
a commission, RealPro charges a one-time fee. As well
as covering help in measuring and describing your home,
the $399 charge pays for fliers and a for-sale sign.
Most importantly, though, it secures a spot on the coveted
RMLS.
RealPro's customers continue to pay commission to buyers'
brokers because they still have to do the same amount
of legwork. But by skipping the traditional sellers'
commission, RealPro customers save more than $5,500
on the average Portland house sale, which stood at $181,000
last year.
Traditional realtors say they do far more than provide
an RMLS listing. Dave Koch, president of the Portland
Metropolitan Association of Realtors, says advice about
market values, improvements to be made, presentation
and financing are all part of the value that a realtor
adds. "What we have to offer is expertise and marketing
skills," he says. "Our business is changing a lot. But
I know the value of the service I bring to the table,
and it's much more than $399."
Koch has a point. For example, although RealPro's agents
are licensed, they do not represent sellers, nor do
they help customers price their houses.
Barbara Sue Seal, perhaps Portland's best-known realtor,
concedes that there is downward pressure on commissions
and that firms like RealPro won't help that trend. She's
seen other companies try to carve out a niche by working
for less but believes you get what you pay for. "Personal
service will never be replaced," Seal says.
Marlow, however, believes Koch and Seal are part of
a dying breed. He maintains that real estate will follow
the stock market, which long ago abandoned fixed commissions.
"Ten years ago, if you traded stocks, you did it through
Merrill Lynch or a full-service house," he says. "Now
most people use discount brokers or trade on the Internet."
Since RealPro opened, four other discount realtors
have sprung up in Portland. Marlow himself recently
opened a second office, in Southeast Portland, and plans
to offer his program statewide.
"I think this is the way the industry is going," he
says. "Ten years from now, most people will list their
homes themselves, and buyers' brokers will make the
money."
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Willamette Week | originally
published April 14,
1999
